New fiscal measures are fueling the ambitious country's brighter and more stable future

The Cameroonian economy has enjoyed robust growth in recent years, with this impressive success supported by the launch of new strategies and mechanisms to raise funds for public investment and the launch of major development projects.

In the early 1990s, the country of 20 million people focused on privileged external financing, but since 2007 the government has recalibrated its strategy towards the financial markets to leverage additional internal and external resources.

This modernization and stabilization of the financial sector has not only streamlined the public expenditure chain, but also increased budgetary resources, boosted foreign investments and reinforced the economy.

"The first step of our greater achievements program was the stabilization of public finance," said Cameroon President, Paul Biya. "Thanks to a new budgetary rigor and the sacrifices consented by the Cameroonian people, our public finance has come back to a better orthodoxy."

In 2006, Cameroon loosened the knot around its indebtedness in a move that paved the way for its economic takeoff. The International Monetary Fund (IMF) and the World Bank are among the international organizations that have recognized this progress. International credit rating agencies have acknowledged this strong economic performance, with one assigning Cameroon its first ever BBB- rating. This has helped local banks re-inject their overly voluminous liquid assets into the real economy. Two years ago, the State allowed the financing of public investments through local banks, with the huge sums generated through a syndicate of domestic banks quickly reinvested in key public energy projects across the country. In September 2010 and June 2011, the Ministry of Finance issued two bond loans of CFA 200 billion and CFA 150 billion, with the former generating CFA 203 billion CFA in 15 days - a record in Africa. In addition, a treasury bond of CFA 50 billion was also issued.

Through these mechanisms, Cameroon has found a way to diversify sources of financing and optimize the mobilization of abundant domestic savings. These non-inflationary resources are also less expensive than traditional financing, with interest rates below 5.25 percent.

Alamine Ousmane Mey, Minister of Finance, said these changes show his country is clearly moving closer to European financial behavior, by modernizing its financial system and the mechanisms of financial intermediation. "Current economic growth in Cameroon allows investors to achieve a very profitable rate of return compared to many other places in the world," he said.

In January of this year, the World Bank published a short update on Cameroon's economic and financial situation. It noted: "Credit to the private sector expanded at end-September by about 25 percent year-on-year (compared to 5 percent at end-September 2010). In addition to a more vibrant economic activity, this strong expansion also reflected partly the increased competition in the banking sector, following the entry of two new banks."

Established in 2003, the Douala Stock Exchange (DSX) is a key instrument in the financing of the national economy, and the ideal platform for increasing companies' credibility, investment appeal and fiscal transparency.

"Establishing a strong and competitive economic infrastructure made it necessary to find an alternative to traditional means of financing whose boundaries are somewhat inevitable," said DSX Director General, Pierre Ekoul Mouangu.

"Modernizing public infrastructure, creating or increasing businesses production capacity, continuing Cameroon's steady economic growth, all require heavy investments that the banks cannot provide, as they are limited by prudential ratios and balance sheet structure. Conditions for listing on the DSX have raised credibility on companies and their account books."

(China Daily 09/25/2012 page18)